Taxpayer-Friendly Procedural Changes in effect as of Friday, Aug. 16

NSTPInternal Revenue Service (IRS)

Taxpayer-Friendly Procedural Changes In Effect

Taxpayer-Friendly Procedural Changes in effect as of Friday, Aug. 16

Taxpayer First Act of 2019

On Friday, August 16, three provisions of the Taxpayer First Act that was signed into law on July 1, 2019 went into effect. The provisions provide additional limits on IRS summonses and require earlier notice to a taxpayer when IRS contacts a third party about the taxpayer's tax liability.

Background. On July 1, the President signed into law the Taxpayer First Act of 2019 (the Act), which changes the management and oversight of IRS with the aim of improving customer service and the process for assisting taxpayers with appeals; modifies IRS’s organization; and provides some new safeguards to taxpayers in their interactions with IRS.

The following taxpayer-friendly provisions went into effect on August 16, 2019: 

John Doe summonses. The Act prevents IRS from issuing a John Doe summons (one that doesn’t identify the taxpayer) unless the information sought to be obtained is narrowly tailored and pertains to the failure (or potential failure) of the person or group or class of persons referred to in the statute to comply with one or more provisions of the Code which have been identified. (Code Sec. 7609(f), as amended Act Sec. 1204(a))

Designated summonses. The Act requires that before issuing a designated summons (an administrative summons issued to a large corporation or person to whom the corporation has transferred the requested books and records), the Commissioner of the relevant operating division of IRS and the Chief Counsel must review and provide written approval of the summons. The written approval must state facts establishing that IRS had previously made reasonable requests for the information and must be attached to the summons. Also, IRS must certify in any subsequent judicial proceedings that a reasonable request for the information was made. (Code Sec. 6503(j), as amended by Act Sec. 1207)

Notice to taxpayer of IRS contact with third party. The Act provides that IRS may not contact any person other than the taxpayer with respect to the determination or collection of the tax liability of the taxpayer without providing the taxpayer with notice at least 45 days before the beginning of the period of the contact. This replaces a requirement that reasonable notice be provided "in advance" to the taxpayer. The period of contact may not be greater than one year. The Act requires that notice be provided only if there is a present intent at the time such notice is given for IRS to make such contacts. (Code Sec. 7602(c)(1), as amended Act Sec. 1206)

IRS has issued interim guidance with respect to this new rule. See “Interim Guidance Memo